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South Korea: crypto business is losing tax benefits

01 August 2018 15:06, UTC

By Ann Sotnikova

The government of South Korea proposed Revised Tax Law 2018. The official statement says that “from next year, virtual currency handling businesses will be excluded from the industries eligible for the tax reduction for SMEs [small and medium-sized enterprises]”.

The Korean crypto community is shocked by these news and is preparing for heavy consequences. However, in the exclusive comment for Bitnewstoday.com Vice Chairman of Korea Blockchain Association & Head of Crypto Exchange Committee Jay Jeehan Kim said: “It won’t have a big impact on exchange business in Korea. It is just regrettable that government's stance on cryptocurrency is still very negative”. Answering the question of whether it is worth waiting for any further deterioration of the conditions for Korean crypto-exchanges, Jay Jihan Kim is also unambiguous: “Not really. As I’ve already mentioned, canceling tax benefits is not a big deal.”

According to the current tax legislation, startups and SMEs can apply for a 50-100% income tax deduction within the first five years and 5-30% thereafter. It is expected that the amendment proposed by the South Korean government will exclude crypto-exchanges from the category of startups or SMEs that can claim to reduce taxes to 100%.

The reason for this decision was that "the business of trading cryptocurrencies has no effect of creating added value". The revised tax law will be submitted to the National Assembly and, if adopted, will come into force from the beginning of the next year.